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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report May 22, 1996
OUTDOOR SYSTEMS, INC.
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(Exact name of registrant as specified in its charter)
DELAWARE 0-28256 86-0736400
(State or other jurisdiction (Commission file number) (I.R.S. Employer
of incorporation) Identification No.)
2502 N. BLACK CANYON HIGHWAY, PHOENIX, ARIZONA 85009
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(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code (602) 246-9569
(Former name or former address, if changed since last report.)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
ACQUISITION - On May 22, 1996, Outdoor Systems, Inc. ("Company")
acquired perpetual easements on certain real property giving the
Company all of the rights to the billboard lease rental income from
approximately 2,420 billboard advertising faces located on
approximately 1,360 different sites in 17 states in the eastern U.S.
The perpetual easements were acquired in a single transaction from
RailCom, Ltd., a Georgia corporation ("RailCom"), pursuant to RailCom's
assignment of its rights under a Purchase and Sale Agreement (the
"Purchase Agreement") dated January 23, 1996, and amended March 29 and
May 21, 1996, between RailCom and CSX Realty Development Corporation, a
Georgia corporation, The Three Rivers Railway Company, a Pennsylvania
corporation, The Atlantic Land and Improvement Company, a Virginia
corporation, Winston-Salem Southbound Railway Company, a North Carolina
corporation, Gainesville Midland Railroad Company, a Georgia
corporation, and Richmond, Fredericksburg and Potomac Railway Company,
[a Virginia and Delaware corporation] (collectively, "CSX"). RailCom
entered into the Purchase Agreement with the intent of purchasing and
operating the easements, rather than acting as a broker or agent of the
Company in the acquisition.
The purchase price for the easements was $21,602,000, plus certain
future payments in an aggregate amount not to exceed $10,050,000 and
payable over a period of ten years beginning no later than the year
2006, with the exact amount and timing of such future payments to be
determined based upon the results of the Company's operations of the
easements. The $21,602,000 was paid in cash at the closing from the
proceeds of an advance under the Company's existing revolving credit
facility.
The perpetual easements are located on real property interests of CSX,
and previously were operated by CSX for the purpose of licensing rights
to operate outdoor advertising displays. CSX is a national railroad
company operating in the several states east of the Mississippi River.
None of CSX, RailCom, or their respective officers, directors or
affiliates are affiliated with or related to the Company or its
officers or directors.
The Company assumed the management and operation of the easements upon
the closing of the transaction on May 22, 1996, and intends to combine
and operate the acquired properties with its outdoor advertising
business currently conducted under its own name in Atlanta, Georgia.
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements of Businesses Acquired - The assets
acquired do not constitute a"business" as defined in Article
11 of Regulation S-X (17 CFR 210.11-01(d)), accordingly,
historical financial statements are not presented.
(b) Pro Forma Financial Statements - Unaudited Pro Forma Combined
Balance Sheet as of December 31, 1995 and Combined Statements
of Income for the Twelve Months Ended December 31, 1995 are
presented on the following page.
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OUTDOOR SYSTEMS, INC.
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
DECEMBER 31, 1995
(IN THOUSANDS)
HISTORICAL ADJUSTMENTS
---------- ----------- PRO FORMA
OSI CSX DEBIT CREDIT COMBINED
--- --- ----- ----- ---------
ASSETS
Current Assts:
Cash and cash equivalents $ 1,739 $ 1,043(a) $ 696
Accounts receivable, net 10,971 10,971
Prepaid expenses and other 2,304 2,304
Deferred income taxes 415 415
-------- --------
Total current assets 15,429 14,386
Property, Plant and Equipment, net 111,729 111,729
Long Term Intangibles $23,919(a) 23,919
Prepaid Land Leases and Other 1,525 1,525
Deferred Financing Costs 4,275 4,275
Deferred Income Taxes 5,255 5,255
-------- -------- ------- ------- --------
Total Assets $138,213 $ $23,919 $ 1,043 $161,089
======== ======== ======= ======= ========
LIABILITIES AND
STOCKHOLDERS' DEFICIENCY
Current Liabilities:
Accounts payable $ 642 $ 642
Accrued interest 4,843 4,843
Accrued expenses and other 1,173 $ 721(a) 1,894
Current maturities of long-term debt 550 550
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Total current liabilities 7,208 7,929
Long-term Debt 141,719 20,000(a) 161,719
Other Long-term Obligations 984 2,155(a) 3,139
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Total liabilities 149,911 174,996
Common Stock - Subject to Put Option 3,420 3,420
Redeemable Preferred Stock 13,649 13,649
Stockholders' Deficiency (28,767) (28,767)
-------- -------- ------- ------- --------
Total Liabilities and
Stockholders' Deficiency $138,213 $ $ $22,876 $161,089
======== ======== ======= ======= ========
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OUTDOOR SYSTEMS, INC.
UNAUDITED PRO FORMA
COMBINED STATEMENTS OF INCOME
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1995
(IN THOUSANDS EXCEPT SHARES AND PER SHARE DATA)
HISTORICAL ADJUSTMENTS
---------- ----------- PRO FORMA
OSI CSX DEBIT CREDIT COMBINED
--- --- ----- ----- ---------
Revenues:
Outdoor advertising $ 74,690 $ 74,690
Lease rental income 3,221 125(d) 3,096
Less agency commissions 10,294 10,294
---------- ------ ----------
64,396 3,221 67,492
Other income 417 417
---------- ------ ----------
Net revenues 64,813 3,221 67,909
---------- ------ ----------
Operating Expenses:
Direct advertising 30,462 125(d) 30,337
Selling, general & administrative 4,096 335 4,431
Depreciation and amortization 9,970 594(b) 10,564
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Total operating expenses 44,528 335 45,332
---------- ------ ----------
Operating Income 20,285 2,886 22,577
Interest Expense 17,199 2,209(c) 19,408
---------- ------ ----------
Income Before Income Taxes 3,086 2,886 3,169
Income Tax Provision 318 9(e) 327
---------- ------ ------ ---- ----------
Net Income $ 2,768 $2,886 $2,937 $125 $ 2,842
========== ====== ====== ==== ==========
Less Preferred Stock Dividends
and Preferred and Common
Stock Accretion 2,461 2,461
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Net Income Attributable to Common
Stockholders' $ 307 $ 381
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Net Income Per Common Share $ 0.03 $ 0.03
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Weighted Average Number of
Common Shares 11,299,590 11,299,590
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NOTES:
1. The unaudited pro forma financial statements of Outdoor
Systems, Inc. reflect, on a pro forma basis, the assets
acquired and the rental income that will be derived from these
assets. The balance sheet as of December 31, 1995, was
prepared as if the assets had been acquired on December 31,
1995. The pro forma statement of operations for the year ended
December 31, 1995, was prepared as if the transaction occured
on January 1, 1995.
The pro forma data are not necessarily indicative of the
financial position or results of operations which would
actually have been reported had the transaction been
consummated at the date mentioned above or which may be
reported in the future.
The pro forma data should be read in conjunction with the
historical financial statements and notes thereto of Outdoor
Systems, Inc.
2. (a) Intangible assets acquired and related acquisition
indebtedness and other liabilities incurred on May
22, 1996.
(b) Annual amortization of acquired intangible asset.
(c) Annual interest expense on additional debt using the
weighted average interest rate for 1995 plus
accretion of the estimated future consideration.
(d) Elimination of lease cost and corresponding rental
income from OSI in 1995 related to acquired assets
formerly leased by the Company.
(e) Estimated income tax provision using OSI effective
tax rate for 1995.
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(c) Exhibits:
2.1 Asset Purchase Agreement between RailCom, Ltd. and Outdoor Systems,
Inc.. dated May 8, 1996
2.2.1 Purchase and Sale Agreement between CSX Realty Development
Corporation, The Three Rivers Railway Company, The Atlantic Land and
Improvement Company, Winston-Salem Southbound Railway Company,
Gainesville Midland Railroad Company, and Richmond, Fredericksburg and
Potomac Railway Company and RailCom, Ltd., dated January 23, 1996, as
amended March 29, 1996, as further amended May 21, 1996.
2.2.2 Amendment to Purchase Agreement, dated March 29, 1996.
2.2.3 Second Amendment to Purchase Agreement, dated May 21, 1996.
2.3 Grant of Easement and Agreement, dated May 21, 1996.
2.4 Assignment of License Agreements, dated May 21, 1996.
2.5 Assignment and Assumption Agreement, dated May 22, 1996
27 Financial Data Schedule
99.1 Press release announcing the transaction, dated May 22, 1996
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
OUTDOOR SYSTEMS, INC.
Date: June 5, 1996 By: /S/ Bill Beverage
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Bill Beverage, Secretary/Treasurer
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INDEX TO EXHIBITS
EXHIBIT DESCRIPTION
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2.1 Asset Purchase Agreement between RailCom, Ltd. and Outdoor
Systems, Inc., dated May 8, 1996
2.2.1 Purchase and Sales Agreement Between CSX Realty Development
Corporation, The Three Rivers Railway Company, The Atlantic Land
and Improvement Company, Winston-Salem Southbound Railway
Company, Gainesville Midland Railroad Company, and Richmond,
Fredericksburg and Potomac Railway Company and RailCom, Ltd.,
dated January 23, 1996, as amended March 29 and
May 21, 1996
2.2.2 Amendment to Purchase Agreement, dated March 29, 1996
2.2.3 Second Amendment to Purchase Agreement, dated May 21, 1996
2.3 Grant of Easement and Agreement, dated May 21, 1996
2.4 Assignment of License Agreements, dated May 21, 1996
2.5 Assignment and Assumption Agreement, dated May 22, 1996
27 Financial Data Schedule
99.1 Press release announcing the transaction, dated May 22, 1996
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